Correlation Between Geospace Technologies and High Arctic
Can any of the company-specific risk be diversified away by investing in both Geospace Technologies and High Arctic at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Geospace Technologies and High Arctic into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Geospace Technologies and High Arctic Energy, you can compare the effects of market volatilities on Geospace Technologies and High Arctic and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Geospace Technologies with a short position of High Arctic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Geospace Technologies and High Arctic.
Diversification Opportunities for Geospace Technologies and High Arctic
-0.18 | Correlation Coefficient |
Good diversification
The 3 months correlation between Geospace and High is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Geospace Technologies and High Arctic Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on High Arctic Energy and Geospace Technologies is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Geospace Technologies are associated (or correlated) with High Arctic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of High Arctic Energy has no effect on the direction of Geospace Technologies i.e., Geospace Technologies and High Arctic go up and down completely randomly.
Pair Corralation between Geospace Technologies and High Arctic
Given the investment horizon of 90 days Geospace Technologies is expected to under-perform the High Arctic. In addition to that, Geospace Technologies is 2.88 times more volatile than High Arctic Energy. It trades about -0.03 of its total potential returns per unit of risk. High Arctic Energy is currently generating about -0.02 per unit of volatility. If you would invest 82.00 in High Arctic Energy on September 4, 2024 and sell it today you would lose (1.00) from holding High Arctic Energy or give up 1.22% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Geospace Technologies vs. High Arctic Energy
Performance |
| Timeline |
| Geospace Technologies |
| High Arctic Energy |
Geospace Technologies and High Arctic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Geospace Technologies and High Arctic
The main advantage of trading using opposite Geospace Technologies and High Arctic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Geospace Technologies position performs unexpectedly, High Arctic can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in High Arctic will offset losses from the drop in High Arctic's long position.| Geospace Technologies vs. Enerflex | Geospace Technologies vs. Oil States International | Geospace Technologies vs. Newpark Resources | Geospace Technologies vs. MRC Global |
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Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Commodity Directory module to find actively traded commodities issued by global exchanges.
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